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Daimler to close St. Thomas, Ont., plant

 

The Canadian Press

October 14, 2008 at 1:30 PM EDT

 

ST. THOMAS, Ont. — Daimler AG is ending truck production at plants in southwestern Ontario and Oregon and cutting 2,300 jobs as the German automaker tries to cope with depressed demand for its heavy vehicles.

 

The closure of the St. Thomas assembly plant, announced Tuesday, will see the loss of another 700 jobs and is the latest blow to hit Canada's manufacturing sector, centred in Ontario and Quebec.

 

A local business leader in St. Thomas said people are “just reeling” from the planned shutdown in the community, which has already seen cuts at a local Ford Canada auto assembly plant and recent layoffs at Magna-owned Formet Industries and 3M in London.

 

“It spins through the entire region,” said Bob Hammersley, general manager of the St. Thomas and District Chamber of Commerce.

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“About 700 workers are directly affected,” but a “lot of suppliers will be affected by the news. The jobs that are going to be lost are not just jobs that are in the city of St. Thomas, but they extend through the entire region.”

 

Blue-collar industries in Canada have seen thousands of jobs wiped out because of the restructuring auto industry, the high value of the loonie in the last two years and the slump in the United States economy, which has cut demand for Canadian-built cars and trucks.

 

In recent months, General Motors, Deere & Co., Volvo and other industrial companies have cut jobs and announced plans to shut down plants in southern Ontario.

 

Earlier Tuesday, Daimler announced in Germany that its North American truck division will drop its Sterling brand and end truck production in St. Thomas next March, when the company's current agreement with the Canadian Auto Workers union expires.

 

However, the German company said it will make additions to its Freightliner and Western Star truck operations to cover the markets for those brands.

 

Daimler Trucks North America will also close its Portland, Ore. truck plant in June 2010, when current contracts there expire. The company said Western Star production will shift to a plant in Santiago, Mexico, while Freightliner-brand military vehicles will be produced at one of its factories in the Carolinas by mid-2010.

 

Daimler said about 2,300 workers at St. Thomas and Portland will be affected by mid-2010.That includes previously announced layoffs of 720 workers at the Ontario plant, whose jobs will go next month.

 

The company also plans to cut its administrative workforce by about 1,200 — with more than half of those directly related to the Sterling brand. A voluntary separation program will be offered.

 

Ken Lewenza, president of the Canadian Auto Workers union, said the plant closure will mean the loss of 1,300 jobs, including workers who will be laid off Nov. 4, and will deal a huge blow to St. Thomas.

 

“This is another example of the loss of hundreds of highly skilled, family supporting jobs which cannot be replaced by the slew of recently created part-time jobs,” said Mr. Lewenza.

 

Last week, Statistics Canada reported creation of 107,000 jobs in the economy in September, but nine in 10 of those were part time.

 

Daimler said in a statement that the truck restructuring plans were drawn up “in response to continuing depressed demand across the industry and structural changes in the company's core markets.”

 

“We are confident that this forward-looking strategy for (Daimler Trucks North America) is the right measure to address the challenges in the North American market,” said Andreas Renschler, the Daimler board member responsible for the truck operation.

 

During a telephone conference call, Mr. Renschler stressed that “we can't wait for a government bailout with taxpayer money.”

 

“We have to act now,” he said. “And that's exactly what we're doing.”

 

The St. Thomas cuts are in addition to the 720 workers already scheduled to be laid off next month with the elimination of one of the plant's last two shifts. Daimler laid off 600 people at the St. Thomas plant last year when the first of three shifts was cut.

 

The plant produces a range of medium- and heavy-duty trucks and once employed more than 2,200 people. With the U.S. economy headed towards recession, demand for heavy trucks used for shipping and other purposes has dropped sharply.

 

Mr. Hammersley said despite the bad layoff news, there are “other dimensions of transportation employment” that St. Thomas could pursue.

 

“We could look at aerospace, we could look at aircraft manufacturing, rail car manufacturing — not just things that are on rubber tires.”

 

Daimler said the truck unit expects to strengthen its position on the North American commercial vehicle market by “concentrating the company's considerable technical and marketing resources on a more focused model lineup.”

 

The company said it expects the changes to improve the truck unit's earnings by $900-million (U.S.) a year by 2011.

 

Daimler shares rose 4.9 per cent at €27.49 euros in trading on the Frankfurt stock market.

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